I have just finished college, I have successfully been hired in my field, and I’m interested in buying a home. My problem is that I have never owned a credit card, so I don’t think I have any established credit. I’ve been told by many people that this will be held against me. Any truth to these rumors? If so, what do I do and when would I be eligible for a home loan?
Not having a credit card at this point in your life is not necessary for purchasing a home. When a lender checks your credit report and recognizes this set of circumstances, they will look at your secondary tier of credit: rent, utilities, etc. As long as you can show you’ve paid your bills on a regular basis, you will be fine. If you never paid the rent, utilities, car payment, student loans, or a credit card debt, then you will need to establish some form of credit, make at least 6 payments to the debt on time, and you will be eligible for a home loan.
I don’t have a lot of savings, but I do have a large income. What type of loan should I pursue?
The most inexpensive way to purchase a home is through owner financing or the FHA loan. With an owner, you can create any type of financing you wish. With FHA loans, there are no salary limits and the total cost of cash necessary is less than 6.5% of the sale price. There are sale price limits to these programs. Check with a REALTOR® to find out what they are in the area you wish to buy.